Site Search Navigation

Site Navigation

Site Mobile Navigation

Supported by

Housing and Recessions

By Floyd Norris February 16, 2007 4:12 pmFebruary 16, 2007 4:12 pm

Here’s another way to look at the housing start numbers: Take a three-month moving average of single-family starts, at a seasonally adjusted rate. That smoothes out some of the weather-induced volatility.
By that measure, starts have now fallen for 11 consecutive months, and are off more than 30 percent over that period.

Here’s a list of the only four other times (going back to 1959) that the figure fell for 11 consecutive months.

1. November 1973 was the 11th month. A recession began that very month.
2. April 1980 was the 11th month. A recession began in January of that year.
3. November 1981 was the 11th month. A recession began in July of that year.
4. February 1991 was the 11th month. A recession began the previous July.

Recessions are a thing of the past. Once upon a time the Republicans, and even a few Democrats, actually believed in letting the business cycle self regulate the economy.

Heaven forbid in today’s anything goes culture the voters should feel the slightest trace of discomfort. Hence the relentless borrowing and money printing to anesthetize the voters into thinking everything’s just hunky dory.

“Almost no one”? Hardly. Fellow New York Times columnist Paul Krugman, Barron’s columnist Alan Abelson and economist Nouriel Roubini of Roubini Global Economics are among the numerous pundits assuring us that a recession is likely. If we do experience an economic slowdown, it will be one of the best-advertised in history.

‘Instead, the market is worried, worried, worried about an American recession. We have news for the market. The recession arrived seven years ago and is gathering strength. GDP in real terms is contracting if one deflates it using an inflation index calculated the way it used to be calculated instead of the hedonic, chain-weighted nonsense that the government churns out to ensure that GDP stays positive. If Uncle Sam was still calculating the rate of inflation the way he did in 1970 when US oil production peaked, it would be over 10% per annum instead of the fictional 2.6% that the government claims today.’ – Chris Sanders. ‘The Fortunate Fifth’//www.sandersresearch.com/index.php?option=com_content&task=view&id=1110

When I look at things such as the risk premium in junk bonds, I see no fear of recession. Very few on Wall Street seem to think one is coming, and the Fed has persuaded investors that it might tighten again — hardly a recession forecast.

The government hasn’t reported an accurate CPI number since the Carter administration. That’s why really smart people in the late 1970s went into real estate speculation.

I think you misunderstand the junk bond yield issue. Rather than allowing a true recession to restore real growth, the government will continue to print money recklessly, turn a blind eye towards corporate accounting shennigans, and maintain very lax credit availability standards.

Long term passive income oriented investors like me adjust to inflation by shifting assets into the mega financials and high yielding raw materials shares like the Mesabi and Fording mineral trusts.

Today’s America is like an obese middle aged person with a sky high bad cholesterol and blood sugar level. Feels just fine before dying suddenly of a massive stroke or heart attack.

Too bad sex education in kindergarten replaced reading the children fables like the “Ant and the Grasshopper” or “Three Little Pigs”.

The Affordable Care Act imposes economic burdens that are the equivalent of taxes, an economist writes. Read more…

About

Economics doesn't have to be complicated. It is the study of our lives — our jobs, our homes, our families and the little decisions we face every day. Here at Economix, journalists and economists analyze the news and use economics as a framework for thinking about the world. We welcome feedback, at economix@nytimes.com.